Elon Musk and his team of software engineers at the Department of Government Efficiency are rampaging through the government in search of fraud, waste, and abuse. The government, they claim, is misusing taxpayer money. They are willing to shut down entire agencies to prove their point. By treating the civil service as a business, as well as importing Musk’s ruthless managerial style into public agencies, the Silicon Valley disrupters believe that the country can produce a leaner and more efficient government.

Put aside for now the fact that these actions are likely illegal and unconstitutional. The central problem is the false assumption of this approach: that problems of inefficiency in federal agencies stem exclusively from the public administration. Much of the waste, inefficiency, and indeed fraud result from the government’s overreliance on private-sector organizations to conduct its work. This byzantine system of outsourcing to nonprofit and for-profit organizations adds costs and creates waste because each nongovernmental contractor exacts fees or imposes a profit margin. In addition, government officials have in recent years exposed multiple cases of embezzlement by USAID contractors, leading to millions of dollars in fines paid out by major companies and their executives.

If the country is serious about improving government efficiency, the emphasis should be on curtailing contracting and making the civil service more accountable—to American voters and to their elected representatives, not to freelance tech bros.

[Peter Wehner: The cruel attack on USAID]

The contracting swamp we have today emerged through previous attempts to streamline government by cutting the federal workforce. All such efforts ended the same way: a modest number of layoffs among public workers combined with a dramatic expansion of private-sector contracting. In fact, our postwar history shows that federal spending has ballooned while the size of the federal workforce has remained almost static: In 1946, the government employed about 2.5 million workers and ran a budget of $628 billion (in today’s dollars); in 2023, it had only half a million more workers, but its budget stood at $4.6 trillion.

How does the government disburse this colossal budget? Through contracting. A 2017 tally estimated that more than 5.2 million contract and grant employees worked for the federal government. On the largely unexamined assumption that the private sector is more efficient, past administrations of both parties have eagerly embraced contracting to make up for limited administrative capacity.

President after president has sought to cut the federal workforce—without reducing the responsibilities and demands on government agencies. That has meant ever greater reliance on contracting. President Ronald Reagan—who famously asserted that government was the problem, not the solution, to the country’s ills—oversaw shrinking the federal civil service by more than 130,000 employees in his first two years in office. Meanwhile, an equivalent number of civil servants was working solely on contract and grant administration. And over Reagan’s first term, spending on contract consultants increased from $1.1 billion to more than $1.5 billion. The Clinton administration echoed Reagan’s rhetoric and sought to win favor for the Democrats with a “reinventing government” program that cut the federal workforce by nearly 400,000 direct hires—even as it expanded the shadow government of contractor workers by nearly 300,000.

USAID, the foreign-aid agency that Musk has been busy feeding “into the wood chipper,” offers a prime example of how extensively privatized so much government work already is. The federal government first made overseas economic development a significant feature of U.S. foreign policy in the years following World War II. From foreign aid’s inception, the government contracted out much of this activity, largely because, after wartime state involvement in industry, a strident anti-statism took hold in Congress. As Cold War anti-Soviet sentiment rose, conservative politicians inveighed against the New Deal federal bureaucracy as evidence of a collectivist power grab. Congress responded by capping the growth of the civil service, but that did not limit the government’s scope or aspirations; foreign aid became a particular Cold War priority as an exercise of soft power. Expansive government aims instead swelled the number of private-sector contractors.

“The entire effort that the government agency carries out here is really carried out through private organizations,” Secretary of State Dean Acheson said in 1952, referring to the forerunner of USAID. “We do not have in the Government sufficient people to staff these operations, sufficient people to give us all the ideas, to give us all the working groups which are necessary.” So private actors would be drafted in to do the work.

Subsequent changes to foreign aid reinforced contracting as the core of U.S. foreign policy, including in the legislative text that originally established USAID in 1961, and in amendments a year later that mandated USAID to “utilize wherever practicable the services of United States private enterprise,” such as “the services of experts and consultants.” As early as 1964, USAID had committed more than $400 million through some 1,200 contracts for technical assistance from universities, for-profit firms, and nonprofits.

This contracting meant that most foreign-aid money went straight to domestic organizations. William Gaud, who led USAID during the Johnson administration, was blunt about this. “The biggest simple misconception about the foreign-aid program is that we send money abroad,” he said in a 1968 speech. “We don’t.” At the time, about 95 percent of the agency’s $1 billion–plus budget was spent directly in the United States.

USAID continued to be an important tool of U.S. foreign policy after the end of the Cold War, overseeing many of the “shock therapy” programs designed to help the former Soviet Union and Eastern Bloc countries transition to Western-style capitalism. But, as an early experiment in Bill Clinton’s “reinvention laboratory,” the agency suffered from the growing reliance on outsourcing. A 1993 Government Accountability Office report noted that expanding USAID work into newly independent countries “further burdened its operating expense budget, resulting in greater dependence on contractors and a greater potential that programs will be vulnerable to fraud, waste, or abuse for lack of adequate oversight.”

The way the contracting system favored U.S. firms was all too apparent. In the shock-therapy programs, U.S. aid was “composed for the most part of financial intangibles and technical assistance,” one U.S. diplomat complained. “The result is that very few Russians have seen anything at all of the vaunted billions … most simply do not believe the money ever existed.” Rather, money flowed from the U.S. government directly to “domestic contractors,” the diplomat added. For obvious reasons, this undermined U.S. foreign-policy goals, generating more frustration and cynicism than gratitude.

By 2001, more than 80 percent of USAID contracts went to domestic for-profit and nonprofit companies. Although Musk has singled out nonprofits that receive grants for projects he finds risible, in practice USAID has long given its most lucrative and important contracts to American corporations. By 1996, consulting and accounting firms such as Abt Associates, Booz Allen Hamilton, KPMG, and Chemonics International all held tens of millions of dollars’ worth of contracts. For such companies, this government spending was virtually their entire business: When Chemonics, for example, reported $85 million in revenue in the last nine months of 1999, 90 percent of its business came from USAID contracts. In 2009, Senator Patrick Leahy of Vermont, a Democrat, lamented that the agency had been reduced to a “check-writing agency.”

At least government-transparency mechanisms made the problems of over-relying on private-sector partners visible and public. But even that degree of accountability is disappearing in Musk’s bonfire of the agencies. USAID’s database of past research projects, for instance, provided scholars like me with valuable insights into foreign aid—and its flaws. Now that resource has been yanked offline. Likewise, inspectors general and the GAO produced reports that highlighted wasteful spending and outright fraud. Recent federal investigations have turned up staggering cases of graft and corruption. Contractors were indicted for a range of fraudulent charges while doing reconstruction and humanitarian work in Iraq and Afghanistan, including classic bribery and wire-fraud cases and engagement in illegal activities to help other contractors secure contracts. As recently as 2023, Booz Allen Hamilton agreed to pay $377 million—one of the largest procurement-fraud settlements in the country’s history—because the for-profit company was caught overbilling the government to cover its private-sector losses.

[David A. Graham: The world’s most powerful unelected bureaucrat]

Silicon Valley tech moguls were not necessary to root out waste; the government was already doing that. But last month, the Trump administration took a hammer to such oversight when the president fired more than a dozen agency watchdogs. Congress could certainly do a better job of oversight, with a greater emphasis on exposing corruption and conflicts of interest. It could also empower inspectors general as its enforcers against graft and waste. One obstacle to smarter reform is that the person charged with overhauling the government has himself been a huge beneficiary of its largesse. Musk’s companies have enjoyed more than $15 billion in contracts over the past decade (including some from USAID), a spigot that continues to pour hundreds of millions of dollars into his pocket every year.  

The contracting model has bloated government costs while hindering public accountability and insulating policy making from citizens. Rather than inviting billionaires to demonize the civil service, the true solution to government inefficiency is to reverse outsourcing. Severing private contractors and hiring more public servants would allow the state to cut time spent managing contractors and devote more resources to the actual work of government. Relaxing hiring regulations could help agencies hire bright and enthusiastic talent, as could raising pay for federal employees. Instead of dismantling the federal workforce, we should put the contracting system in the wood chipper.

Ronald Reagan National airport halts all takeoffs and landings following midair collision.

Edmund Wilson hated mysteries. In the 1940s, one of the most respected literary critics in America outlined his objections to the genre in a pair of caustic essays, “Why Do People Read Detective Stories?” and “Who Cares Who Killed Roger Ackroyd?” After receiving a deluge of irate responses, Wilson conceded that he had recently been reading himself to sleep with the Sherlock Holmes series, enthralled by its “fairy-tale poetry of hansom cabs, gloomy London lodgings, and lonely country estates.” He contended, however, that Holmes’s cases occupied a special category: “They are among the most amusing of fairy-tales and not among the least distinguished.”

If Sherlock Holmes really is the last of the classic fairy-tale heroes, he may also be the first to have been protected by modern intellectual-copyright law. Sir Arthur Conan Doyle introduced Holmes to his loyal companion, Dr. Watson, in the 1887 novel A Study in Scarlet, but the final stories didn’t fall out of copyright until January 1, 2023. Now that the characters are unambiguously free to use, numerous Holmes projects are scheduled to premiere or begin filming in the coming year alone, including Guy Ritchie’s Young Sherlock series on Amazon; Watson, a CBS procedural starring Morris Chestnut; and Sherlock & Daughter with David Thewlis on the CW. Brendan Foley, the creator of Sherlock & Daughter, told me that “the escape of Holmes and Watson into the public domain” might not be the only explanation for the coming surge, but “it certainly didn’t hurt.”

The latest spin-offs can safely ignore the confusing rights issues that plagued earlier adaptations. For the big-budget action movies that Ritchie directed with Robert Downey Jr., Warner Bros. took the extraordinary step of signing agreements with two competing entities that claimed to own Holmes. Robert Doherty, the creator of Elementary, which reimagines Holmes in present-day New York, told me in an email that the rights situation for his CBS series was “murky” but that a deal was struck out of an abundance of caution: “I think the view on the studio side was that the characters were indeed in the public domain. At the same time, all parties wanted to tread very carefully.”

Although the Holmes copyright debacle has finally expired, it offers a preview of even more contentious battles to come. Modern audiences have plenty of experience with the notion of a series character, developed over decades, who inspires both “fan works”—a concept that Holmes devotees essentially invented—and a seemingly endless string of reboots. For one glaring example, a little more than a decade from now, the public domain will welcome the earliest stories featuring another hero often called “the world’s greatest detective”: Batman. And his current owners will have every reason to study the playbook of the Doyle estate.

The confusion surrounding Holmes stands as a cautionary tale about the manipulation of copyright law—not by opportunists exploiting a valuable piece of intellectual property, but by the character’s official custodians. Last year marked the 50th anniversary of Nicholas Meyer’s novel The Seven-Per-Cent Solution, which imagined Sigmund Freud treating Holmes for his addiction to cocaine. Its release was delayed for months by negotiations with Doyle’s copyright holders, resulting in what Meyer now calls “no seven-per-cent solution, I promise you.”

After the novel became a best seller, Meyer wrote five sequels, including last year’s Sherlock Holmes and the Telegram From Hell, but he told me that he might never have attempted the first novel if he had foreseen the ensuing headaches: “I had done a back-of-the-envelope calculation and convinced myself that Holmes was in the public domain. Math is not my strong suit.” Yet even for the experts, untangling the facts of the case has always been a three-pipe problem—the kind of mystery that Holmes could solve only after three pipefuls of his favorite shag tobacco.

[Read: Sherlock Holmes, unlikely style icon]

Over the four decades during which Doyle wrote the original stories, international copyright law was rapidly evolving. After the author died in 1930, a colorful array of contenders fought over the rights, including his playboy sons, Denis and Adrian; Denis’s widow, the former Princess Nina Mdivani; and the producer Sheldon Reynolds and his wife, Andrea, who had a very public affair with the notorious socialite Claus von Bülow. Eventually, those rights coalesced under the Conan Doyle Estate Ltd., which is overseen by various family members. (There are no direct descendants.) But the confusion didn’t end there. The four novels and 46 short stories published before 1923 entered the public domain in 1998. Only the last 10 stories in the series were covered by the Copyright Term Extension Act—nicknamed the “Mickey Mouse Protection Act,” after its most famous beneficiary—that passed later that year, postponing future expirations of some copyrights by decades.

Yet the Doyle estate used those late stories as a wedge, arguing that it retained licensing rights for all works featuring Holmes and Watson during the remaining quarter of a century before the final tales—widely seen as the worst of the bunch—fell out of copyright. Their claim: The characters didn’t assume their definitive form until the series was complete. The estate based its argument on a distinction between “flat” and “round” fictional characters first proposed by E. M. Forster in his 1927 book, Aspects of the Novel, a concept frequently invoked in high-school literature classes but never previously tested in court.

In its legal filings, the estate drew a contrast between “flat” characters without depth—such as Superman and Amos and Andy—and “round” characters such as Holmes, who were capable of complexity and change. Doyle, it said, continued to develop Holmes to the very end, gradually transforming him from a reasoning machine into an empathetic figure who displays affection for women, dogs, and even his long-suffering partner. And it soon became clear that this argument would have enormous implications for copyright holders, who would be motivated to retain control over their characters by changing them incrementally for as long as possible.

In 2013, the estate was sued by the prominent Sherlockian Leslie S. Klinger, who refused to pay a licensing fee for an anthology of new Holmes stories by contemporary writers. Klinger said that all of the detective’s crucial components—including his “bohemian nature” and his “aptitude for disguise”—were established early in the series. (As other commentators have noted, some of Holmes’s most recognizable characteristics—the deerstalker cap, the distinctive curved calabash pipe, the phrase “Elementary, my dear Watson”—never appeared in Doyle’s stories at all.)

After the case was decided in Klinger’s favor, an appeal ended up before U.S. Circuit Judge Richard Posner, who upheld the ruling and ordered the estate to pay all legal costs, criticizing its strategy as “a form of extortion” against creators: “It’s time the estate, in its own self-interest, changed its business model.” Yet the lingering “fog of uncertainty,” as Klinger’s lawyer described it, allowed the estate to continue policing its claim on elements from the final run of stories, especially their alleged depiction of a more emotional Holmes.

In 2015, the estate filed suit against the makers of Mr. Holmes, an Ian McKellen film adapted from a novel by Mitch Cullin, who complained to a reporter, “It is cheaper for corporations to settle than go to court, and I believe the estate is not only keenly aware of that reality, but that they bank on it as an outcome.” Five years later, it went after the Netflix movie Enola Holmes, contending that the estate owned the stories that defined the version of Holmes “stamped in the public mind.” Both suits were likely privately settled, but with all rights now expired, the estate has turned to what its head of licensing, Tim Hubbard, described in an email as “authenticat[ing] projects and partnerships where our collaborators want to be connected to the source.” (The estate declined to address specific questions about its legal strategies or arguments.)

[Read: Generative AI is challenging a 234-year-old law]

It has also been relieved of the obligation to make an argument that Meyer, the author of The Seven-Per-Cent Solution, succinctly dismissed to me as “bullshit.” The estate created a false narrative about the character it was supposedly protecting, Meyer argued, ignoring the abundant earlier evidence of what Watson calls the “hidden fires” smoldering beneath the exterior of the otherwise rational Holmes, who displays humor, empathy, and emotion throughout the series.

One could plausibly claim, as Klinger suggested, that all of the important aspects of the character were there from the very beginning. In his seminal 1910 essay, “Studies in the Literature of Sherlock Holmes,” the theologian Ronald A. Knox identified 11 elements of the archetypal case. According to Knox, the only story that contained the full list was none other than A Study in Scarlet, which was published in the United States by J. B. Lippincott in 1890.

Betsy Rosenblatt, a law professor at Case Western Reserve University, told me that the novel’s U.S. copyright would have lasted a maximum of 56 years, meaning that the characters should have entered the public domain in America in 1946. If creators had been allowed to independently explore eight decades sooner one of the most popular fictional characters in history, our picture of Holmes might have been immeasurably enriched.

These issues aren’t merely historical or hypothetical. In 2034, the oldest Superman comics will enter the public domain, followed a year later by Batman. Jay Kogan, a senior vice president in charge of legal affairs at DC Comics, has advocated for protecting the company’s stake in its superheroes “by gradually changing the literary and visual characteristics of a character over time.” Whereas Holmes evolved organically—or so the estate has claimed—Bruce Wayne might don new costumes only so that a corporation can assert control over “the de facto standard” of the Dark Knight.

Creativity, however, doesn’t follow the logic of copyright law. Once a character becomes a cultural possession—with the “fairy-tale” quality that enchanted Edmund Wilson—even a rudimentary form will carry the aura of its other incarnations. As soon as the earliest version of Batman is freely available, creators will benefit from his full history, turning these associations to all kinds of surprising ends. This is exactly why copyrights expire. Holmes and Watson are eternal not because they are mysteriously “round,” but because they are flat enough to fit into new stories for every generation.

E. M. Forster, who defined these categories in the first place, saw that flatness can be enormously satisfying: “We all want books to endure, to be refuges, and their inhabitants to be always the same, and flat characters tend to justify themselves on this account.” Doyle himself knew that such reliability could be a source of comfort. In the 1917 story “His Last Bow,” which transposed the pair from the Victorian era into the Great War, Holmes offered a backhanded compliment to his faithful friend: “Good old Watson! You are the one fixed point in a changing age.”